World stock markets are bracing themselves for a further week of uncertainty following last week's turmoil which saw share prices plummet. Although Wall Street finished on a more positive note on Friday, eyes will be focused on First Active's share debut and President Clinton's speech to the IMF tomorrow, and on the Bank of England's monetary policy committee meeting on Thursday which may sanction an interest rate cut. More immediate will be the Central Bank's opportunity today to change the repo rate - the interest rate at which it supplies funds to the wholesale market - which would signal a move on interest rate cuts. With the downward trend in international rates set to continue, there have been some indications of a reduction in the 6.19 per cent rate today, although some brokers feel the Central Bank will wait for the publication of the September inflation figures on Thursday before sanctioning the first move downwards in the run-up to joining the euro on January Ist.

Any remaining hopes that German rates will shortly be cut were dashed over the weekend when the Bundesbank president, Mr Hans Tietmeyer, said nobody expects Germany to lower interest rates in the short-term. However, he said Germany would "continue to follow developments closely". A statement issued after the G7 meeting of finance ministers and Central Bank governors made no direct reference to interest rates but called for greater co-operation between G7 countries to create condition for stability.

While the US Fed changed its monetary policy last Tuesday with a 0.25 percentage point cut in interest rates, this failed to boost markets, which had been hoping for a sharper cut.

Mr Tietmeyer noted that, if interest rates in the euro zone converge at the current French and German level of 3.30 per cent for the launch of the EU single currency in January, this would be the equivalent of a 50 basis points cut in the average euro zone interest rate, double the US cut last week.

The British Chancellor of the Exchequer, Mr Gordon Brown, said he would not use his emergency powers to order the Bank of England to cut interest rates to help cushion the impact of global economic turmoil.

Mr Brown, who gave the bank operational independence over monetary policy last year, told BBC radio from Washington that interfering with the central bank's MPC would undermine its credibility.

"I am not intervening and I have got no intention of doing so," said Mr Brown, who is attending the annual meetings of the International Monetary Fund and World Bank. "The credibility of our new system of interest-rate decision-making depends not on politicians second-guessing that system but upon it being seen to have taken politics out of the making of interest-rate decisions," he added.

However, in a clear indication that he would like the MPC to lower its key short-term rate, now at 7.5 per cent, Mr Brown said borrowing costs in North America had already come down because policy-makers recognised that the threat of inflation had eased.

Mr Tietmeyer also said that the recent downturn in the German stock market was not some kind of catastrophical situation, it is a "correction". However, German bank stocks could fall further after last week's major losses because they have yet to report nine-month results which should contain more bad news about emerging markets losses, BNP said at the weekend.

BNP analyst Ms Britta Graf said she had lowered her earnings estimates for German banks for 1998, 1999 and 2000 and warned it was too early to buy the stocks despite their severe declines last week.

It is a poor backdrop against which First Active will launch on the market. The bank will announce the price at which it will float today and there is speculation that it will announce a price of around 265p - the bottom of its target range - or lower.